Fed could raise interest rates ‘soon’: Yellen

The chair of the US Federal Reserve, Janet Yellen, has indicated that it could raise interest rates "relatively soon".

She said this on Thursday in Congressional testimony that included a pledge to serve out her term.

Yellen said the US central bank would change its outlook as necessary as the new administration rolls out plans for perhaps hundreds of billions of dollars in tax cuts and additional government spending.

She also suggested the new government keep in mind that the United States is near full employment and inflation may be rising.

She said the job market had made further improvements this year and that inflation, while still below the Fed`s 2.0 per cent target, had started to pick up.

Financial markets are expecting the Fed to take action at a meeting next month.

She also defended the independence of central banks after criticism of the Fed by President-elect Donald Trump.

In December last year, the Fed raised its benchmark rate for the first time in seven years, from near zero to its current level of between 0.25 per cent and 0.5 per cent, according to a news agency report.